Final Results

Henderson High Income Trust PLC 08 March 2006 8 March 2006 HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2005 Highlights • Another year of strong performance • Increase in share price over the year of 32.2% • Net asset value total return of 28.7% Extracts from the Chairman's Statement: This has been a busy and exciting year for the Company, securing a vote to continue the life of the Company for a further five years, repaying the Zero Dividend Preference shares and achieving a successful share offering in September. However, the most rewarding feature of the year has been the performance of the assets and share price. Given our bias towards income yielding shares, strong stock markets do not necessarily benefit us, but over 2005 the total return of our net assets has comfortably exceeded that of the main UK stock market indices. Assets and Performance I am very happy to report a strong finish to the year which resulted in the Company's ordinary shares registering a net asset value total return of 28.7%. This compares with a 22.0% increase in equities as measured by the FTSE All-Share Index and a 7.9% return from fixed interest as measured by the FTA Government All Stock Index. The rise in the ordinary share price of 32.2% was greater as the Company's discount narrowed. The slow decline in long gilt yields in the UK has been beneficial so far for equity valuations and, in a sense is also driving the increasing takeover activity funded by cheap long-term debt. A single interest rate cut by the Bank of England in August helped to boost confidence amongst corporates that the economy was on a reasonably sound footing. The UK consumer seems to have taken a little more time to reach this view, as retail spending failed to recover during the autumn, although recent evidence in the housing market is pointing to greater confidence. Corporate earnings have risen just as fast as the stock market, led by companies with large overseas earnings. The weakness of sterling has meant a boost in overseas profits which, in turn, has led to better than expected dividends and share buy-backs, further underpinning equity valuations. - MORE - - 2 - HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2005 Board I have been a director of Henderson High Income for 17 years, with the last four as Chairman and, now that the Company has completed its restructuring, this is an appropriate time to step down from the Board. I have very much enjoyed working with the Company and all those associated with it. In addition, Patrick Dalby has also indicated that he wishes to retire at the forthcoming AGM. Patrick has been a director of the Company, in one form or another, for 16 years and his contribution to the Board, especially in investment matters, has been of great benefit. We both wish the Company and its shareholders every good fortune in the future. The other Board members have given much consideration as to my successor and have decided that Hugh Twiss will succeed me as Chairman following the forthcoming AGM on 2 May. Hugh has a wide range of experience managing investment trusts and as a director, and the Board believes he is an excellent choice as Chairman. I would like to welcome all the shareholders to the AGM this year, where the Portfolio Manager, Alex Crooke, will make his usual short presentation about recent performance and the portfolio as a whole. Dividends Dividend growth continues to be pleasing, reflecting the strong free cash flow of companies and a will to return unused cash balances to shareholders. This year's accounts are somewhat distorted by the adoption of new accounting standards, the consequence of which is a number of restatements. In particular, I should like to draw attention to what appears to be a very healthy surplus transfer to reserves. On an underlying basis, however, we have distributed all our available income to shareholders this year. As indicated in my report last year, following the Company's capital restructuring, our intention is to pay a rebased minimum dividend of 7.75p for the year to 31 December 2006 and I am pleased to say that we are on track to meet this forecast. Prospects The UK stock market rose strongly in the last two months of 2005 and has carried this performance into the current year. The breadth of the market rise illustrates investors' strong confidence even if the wider global economic and political positions remain uncertain. A careful eye needs to be trained on the United States to judge how the economy copes with interest rates materially higher than a year ago. However, as long as bond yields broadly maintain their current level, markets appear to offer good value and provide a reasonably positive background, for equities at least. W D Eason March 2006 - MORE - - 3 - HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2005 Statement of Total Return (incorporating the revenue account) for the year ended 31 December 2005 Year ended 31 December 2005 Year ended 31 December 2004 (Restated) Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Net capital gains from investments - 19,355 19,355 - 13,991 13,991 Income from fixed asset investments 6,596 - 6,596 6,311 - 6,311 Other interest receivable and similar income 92 - 92 54 - 54 ---------- ---------- ---------- ---------- ---------- --------- Gross revenue and capital gains 6,688 19,355 26,043 6,365 13,991 20,356 Management and performance fees (288) (1,210) (1,498) (257) (1,039) (1,296) Other administrative expenses (309) (173) (482) (247) - (247) ---------- ---------- ---------- ---------- ---------- --------- Net return on ordinary activities before interest payable and taxation 6,091 17,972 24,063 5,861 12,952 18,813 Interest payable (358) (1,074) (1,432) (275) (824) (1,099) Movement in provision for redemption of the zero dividend preference shares in the subsidiary - (2,253) (2,253) - (2,821) (2,821) ---------- ---------- ---------- ---------- ---------- --------- Net return on ordinary activities before taxation 5,733 14,645 20,378 5,586 9,307 14,893 Taxation on net return on ordinary activities (217) 204 (13) (269) 257 (12) ---------- ---------- ---------- ---------- ---------- --------- Net return on ordinary activities after taxation 5,516 14,849 20,365 5,317 9,564 14,881 ---------- ---------- ---------- ---------- ---------- --------- Dividends: ordinary shares Write back of time expired dividends 8 - 8 - - - 2004 3rd interim paid of 2.475p (2003: 2.475p) (1,387) - (1,387) (1,387) - (1,387) 2004 4th interim paid of 2.475p (2003: 2.475p) (1,387) - (1,387) (1,387) - (1,387) 1st interim paid of 2.475p (2004: 2.475p) (1,387) - (1,387) (1,387) - (1,387) 2nd interim paid of 2.475p (2004: 2.475p) (1,387) - (1,387) (1,386) - (1,386) ---------- ---------- ---------- ---------- ---------- --------- (5,540) - (5,540) (5,547) - (5,547) ---------- ---------- ---------- ---------- ---------- --------- Transfer (from)/to reserves (24) 14,849 14,825 (230) 9,564 9,334 ====== ====== ====== ====== ====== ===== Return per ordinary share 9.33p 25.12p 34.45p 9.49p 17.07p 26.56p ====== ====== ====== ====== ====== ===== The total columns of this statement represent the profit and loss accounts of the Company. All of the Company's operations were of a continuing nature in the current and prior years. There are no recognised gains or losses in either the current year or previous year other than the results for the financial years ended 31 December 2005 and 31 December 2004 respectively, as stated above, and therefore no statement of total recognised gains and losses is required. - MORE - - 4 - HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2005 Balance Sheet at 31 December 2005 2004 2005 (Restated) £'000 £'000 Fixed asset investments 141,845 130,598 ---------- ---------- Current assets Debtors 1,152 1,061 Cash at bank 1,834 1,665 ---------- ---------- 2,986 2,726 Creditors: amounts falling due within one year (38,226) (59,763) ---------- ---------- Net current liabilities (35,240) (57,037) ---------- ---------- Total assets less current liabilities 106,605 73,561 ====== ====== Capital and reserves Share capital 3,433 2,801 Capital redemption reserve 26,302 26,302 Other capital reserves Share premium 26,620 9,034 Realised reserve 14,415 13,726 Unrealised appreciation 32,295 18,134 Revenue reserve 3,540 3,564 ---------- ---------- Equity shareholders' funds 106,605 73,561 ====== ====== Net asset value per ordinary share 155.26p 131.29p ====== ====== - MORE - - 5 - HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2005 Cash Flow Statement for the year ended 31 December 2005 2005 2005 2004 2004 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 4,761 5,085 Servicing of finance Bank overdraft and loan interest paid (1,577) (1,092) Taxation Taxation recovered 7 11 Financial investment Purchase of investments (26,410) (24,033) Sale of investments 34,526 27,791 ----------- ----------- Net cash inflow from financial investment 8,116 3,758 Equity dividends paid (5,540) (5,547) ----------- ----------- Net cash inflow before financing 5,767 2,215 Financing Issue of shares 18,640 - Share issue expenses (405) - Redemption of zero dividend preference shares in subsidiary (39,385) - Increase/(decrease) in debt 15,558 (909) ----------- ----------- Net cash outflow from financing (5,592) (909) ---------- ---------- Increase in cash in the year 175 1,306 ====== ====== Reconciliation of net cash flow to movement in net debt Increase in cash as above 175 1,306 Cash (inflow)/outflow from (increase)/decrease in debt (15,558) 909 Exchange movements (6) 44 ---------- ---------- Movement in net debt (15,389) 2,259 Net debt at 1 January (19,835) (22,094) ---------- ---------- Net debt at 31 December (35,224) (19,835) ====== ====== - MORE - - 6 - HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2005 Notes: 1. Accounting Policies a. Basis of accounting This announcement has been prepared on the historical cost basis of accounting, modified to include the revaluation of investments. The accounts have been prepared on the basis of the accounting policies as stated in the previous year's financial statements in accordance with applicable UK law and accounting standards and with the Statement of Recommended Practice Financial Statements of Investment Trust Companies ("the SORP") (revised January 2003) except, in the case of the SORP, as follows: - Investments are now held at fair value (previously mid-market) in accordance with FRS 26. This is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted. - Dividends payable are now recognised in the period in which they are paid in accordance with FRS 21. The prior year comparatives have been restated in respect of this change in accounting policy. b. Valuation of investments UK listed investments are valued according to the prices issued by the London Stock Exchange, these being the closing bid prices for all investments other than FTSE 100 constituents and FTSE 100 reserve list constituents for which the last trade prices are used. Overseas listed investments are valued at closing bid prices. Investments are designated as fair value through profit or loss in accordance with FRS 26. All fair value movements on investments are taken to the Statement of Total Return. The total column of the Statement of Total Return represents the Company's profit and loss account. In accordance with the SORP, the Company's profit and loss account is split between revenue and capital elements as can be seen in the Statement of Total Return. Fair value movements on investments are taken to the capital column in the Statement of Total Return. c. Capital gains and losses Realised and unrealised capital gains and losses are recognised in the Statement of Total Return and are detailed within other capital reserves. 2. Returns per ordinary share Revenue return per ordinary share is based on the earnings attributable to the ordinary shares of £5,516,000 (2004: £5,317,000) and on the 59,111,073 weighted average number of ordinary shares in issue during the year (2004: 56,028,865). Capital return per ordinary share is based on the net capital gains for the year of £14,849,000 (2004: £9,564,000) and on the 59,111,073 weighted average number of ordinary shares in issue during the year (2004: 56,028,865). - MORE - - 7 - HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2005 3. Reconciliation of movements in ordinary shareholders' funds 2004 2005 (Restated) £'000 £'000 Net revenue on ordinary activities after taxation 5,516 5,317 Dividends (5,540) (5,547) --------- --------- (24) (230) Increase in realised and unrealised profits 14,850 9,564 --------- --------- 14,826 9,334 Issue of ordinary shares 18,218 - Ordinary shareholders' funds at 1 January 73,561 64,227 --------- --------- Ordinary shareholders' funds at 31 December 106,605 73,561 ====== ====== 4. Reconciliation of net return on ordinary activities before interest payable and taxation to net cash inflow from operating activities 2005 2004 £'000 £'000 Net revenue before interest payable and taxation 6,091 5,861 (Increase)/decrease in accrued income (84) 16 Increase in creditors 165 277 Tax on investment income (28) (30) Management fee and expenses charged to capital (1,383) (1,039) --------- --------- Net cash inflow from operating activities 4,761 5,085 ===== ===== 5. Dividends (a) Change in presentation and restatement The Statement of Total Return now shows only dividends paid during the year in accordance with FRS 21. The Statement of Total Return, Balance Sheet and the Reconciliation of Movements in Shareholders' Funds (Note 3) have been restated accordingly. The effect on the Balance Sheet at 31 December 2004 Per ordinary share £'000 Net assets at 31 December 2004 as previously stated 70,788 126.34p Add back 2004 third and fourth interim dividends paid in 2005 2,773 4.95p --------- ---------- Restated net assets at 31 December 2004 73,561 131.29p ===== ====== - MORE - - 8 - HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2005 5. (a) Change in presentation and restatement (continued) The effect on the Balance Sheet at 31 December 2003 Per ordinary share £'000 Net assets at 31 December 2003 as previously stated 61,454 109.68p Add back 2003 third and fourth interim dividends paid in 2004 2,774 4.95p -------- --------- Restated net assets at 31 December 2003 64,228 114.63p ===== ====== (b) Proposed dividends A third interim divided of 1.9375p per ordinary share of 5p (2004: 2.475p per ordinary share of 5p) was paid on 31 January 2006. A fourth interim dividend of 1.9375p per ordinary share of 5p (2004: 2.475p per ordinary share of 5p) will be paid on 28 April 2006 to shareholders on the register on 31 March 2006. The shares will be quoted ex-dividend from 29 March 2006. 6. Share capital At 31 December 2005 there were in issue 68,662,798 (2004: 56,028,865) ordinary shares of 5p in the Company. 7. Status of preliminary announcement The financial information set out in this preliminary announcement does not constitute the Company's statutory accounts for the years ended 31 December 2005 or 2004. The figures and financial information for the year ended 31 December 2004 are derived from the latest published accounts of the Company as restated. Those accounts, before restatement for the accounting policy changes detailed in note 1, have been delivered to the Registrar of Companies and include the report of the auditors which was unqualified and did not contain statements under either section 237(2) or section 237(3) of the Companies Act 1985. The statutory accounts for the year ended 31 December 2005 have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them. The statutory accounts for the year ended 31 December 2005 will be finalised on the basis of the information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. 8. Annual report and Annual General Meeting The full Annual Report and Accounts will be posted to shareholders in March and copies will be available from the Secretary at the Company's Registered Office, 4 Broadgate, London EC2M 2DA. The Annual General Meeting will be held on Tuesday 2 May 2006. - MORE - - 9 - HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2005 For further information please contact: Alex Crooke James de Sausmarez Portfolio Manager Head of Investment Trusts Henderson High Income Trust plc Henderson Global Investors Telephone: 020 7818 4447 Telephone: 020 7818 3349 Sarah Gibbons-Cook Investor Relations and PR Manager Investment Trusts Henderson Global Investors Telephone: 020 7818 3198 - ENDS - This information is provided by RNS The company news service from the London Stock Exchange

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